Keywords Studios

LN: KWS

£894.8m market cap

1375p last close

Keywords Studios is now the largest and most diverse supplier of outsourced services to the games industry. Through regular acquisitions, the company is building its scale, geographic footprint and delivery capability.

Investment summary

Keywords Studios is the largest supplier of outsourced services to the games industry. Through regular M&A, the company is building its scale, geographic footprint and delivery capability. Keywords’ trading update highlighted stronger than anticipated H1 revenue growth of c 39% to €153.1m, although accelerated investment restrained adjusted PBT growth to c 15%. With strong underlying demand, the potential for margin leverage and an increased M&A capacity, Keywords looks set for a strong H2. Our forecasts are essentially unchanged for now, but we will review them later in the year.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2017A 151.4 26.6 23.1 30.0 50.0 41.2
2018A 250.8 44.2 37.9 45.8 32.8 25.1
2019E 299.6 51.4 44.2 54.4 27.6 28.9
2020E 335.5 57.4 49.5 61.0 24.6 26.9
Last updated on 13/09/2019
Industry outlook

Keywords Studios operates in the global games sector, an industry where change and innovation are the norm. We believe that the dynamics of the industry remain attractive and looking ahead, we see sustained industry growth (c 9% to 2022), driven by ongoing digital transition and strategic investment in the sector (streaming, eSports), as well as a continuing shift towards outsourcing for large projects.

Last updated on 13/09/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (€m) 9
Forecast gearing ratio (%) 4
Price performance
%
1m
3m
12m
Actual (10.8) (19.0) (29.1)
Relative* (12.9) (19.6) (29.6)
52-week high/low 1954.0p/900.0p
*% relative to local index
Key management
Ross Graham Chairman
Andrew Day CEO
David Broderick FD

Content on Keywords Studios